This is a subscriber-only article
The real story from last Wednesday's tillage farmer meeting in Bunclody, Co Wexford, was that this was the night the Irish Grain Growers Group grew up.
Previously primarily focused on the ills inflicted on malt barley growers by the deals agreed between IFA representatives and Boortmalt, Wednesday’s meeting brought a wide-angle lens to the sector.
It was only natural that the majority of media attention from Wednesday night's Irish Grain Growers Group (IGGG) meeting was on the assurances from Michael Hoey and Chris Harmon that the Beet Ireland project is still on track.
The loss of the sugar beet industry was a deeply emotive issue, cost thousands of jobs up and downstream, and its revival would involve a €300m spend.
For those who have been closely watching, this was nothing more than a re-affirmation of intent.
For six years, Michael Hoey has personally driven and funded the revival of sugar beet processing. His presence was to respond to the doubts about its viability expressed in last autumn’s Oireachtas Agriculture Committee’s report on the tillage sector.
He did so in the presence of the committee’s Pat Deering, who was at pains to offer his personal support to the project.
If a factory is to be built, it will be on the Carlow/Kilkenny TD’s patch.
As far back as April 2015, I reported that Beet Ireland had decided on a site in Ballyburn, Co Kildare, adjacent to the M9 near the Carlow border. The purchase has been complicated it being in a portfolio of assets of a company that was placed in receivership.
On Wednesday evening, a man claiming to have rights to the land disrupted the meeting briefly, but it is understood the legal process will soon be complete.
Shareholding
Owning a site is not the end of the journey, of course, only the beginning. To build a factory, farmers will have to commit to grow the crop.
Beet Ireland wants that commitment to be in the form of shareholding, which will grant growing rights and partial control of the processor.
It’s the model of dairy production and processing, and worked well, but the buy-in is significant.
The maximum shareholding required to supply milk to Glanbia is €10,000 – 2,000 shares at €5 each. In comparison, the buy-in for Beet Ireland is mooted at €25,000 for every 400t of beet delivered.
The typical investment would probably be in the order of 1,200t or a whopping €75,000 (50 acres x 24t).
One investment is in a co-op with over €2bn in assets and a proven track record of profitability-the other is in a start-up.
None of this is a criticism of Beet Ireland’s viability, but the reality is that we must compare tillage farming to dairying.
A lot of tillage farmers have the essential requirement for dairy farming – a block of land to graze a milking herd on. Long-term investment must be in the farm and family’s best interest.
Growing beet and transporting it
Growing beet for processing again will require increased average yields both in beet tonnage and sugar percentage.
Transport is a huge cost for what is a bulky product; Beet Ireland envisages a “community rating” system, where distance from the factory will not be as defining an issue.
In the old days, beet made up to €50/t, yield for many growers was consistently well north of 50t/ha, and transport was heavily subsidised.
Michael Hegarty of Teagasc was present in the audience on Wednesday, and confirmed that beet was the crop that delivered the best returns to tillage farmers in 2017 – it is possible.
The question is whether farmers are ready to make the investment in shareholding and in specialised equipment required.
Would Pat Deering be prepared to push for an early commitment for a beet equipment TAMS? That might help influence farmers to commit.
Michael Hoey and Chris Harmon made great play of the fact that they led the drive for the abolition of sugar quotas to allow Ireland back in to production with no buy-in required.
They worked hard to that end, and deserve credit for taking advantage of Simon Coveney’s presence in the chair of the agricultural council in brokering the final agreement on the Common Agricultural Policy (CAP).
It was always likely that logic would dictate that as with the dairy sector, the end of quotas would mean total liberalisation of the market, but Beet Ireland helped to ensure there was no slippage.
Investing
Persuading farmers to commit to growing and investing is now the challenge. We all should wish them well.
The figures are far from convincing – sugar prices loiter at around the €600/t mark, way below the old protected market price, but some of the best investment decisions farmers have made, both on their farms and in the co-op movement, were done on gut feeling as much as on projected balance sheet guarantees.
SHARING OPTIONS: